God's Bankers: A History of Money and Power at the Vatican

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Contents

Preface

1 Murder in London

2 The Last Pope King

3 Enter the Black Nobles

4 Merely a Palace, Not a State

5 An Unholy Alliance

6 The Pope Banker

7 Prelude to War

8 A Policy of Silence

9 The Blacklist

10 Blood Money

11 A Nazi Spy in the Vatican?

12 The Ratline

13 He’s No Pope

14 The Men of Confidence

15 You Can’t Run the Church on Hail Marys

16 Operation Fraulein

17 Il Crack Sindona

18 The Battle of Two Scorpions

19 A Psychopathic Paranoid

20 The Year of Three Popes

21 The Backdoor Deal

22 The Vatican Has Abandoned Me

23 You Have to Kill the Pope

24 Tell Your Father to Be Quiet

25 Protect the Source

26 A Heck of a Lot of Money

27 I’ve Been Poisoned

28 White Finance

29 Suitcases of Cash

30 Burying the Trail on Nazi Gold

31 A Criminal Underground in the Priesthood

32 His Inbox Was a Disaster

33 The Kingmaker Becomes King

34 As Flat as Stale Beer

35 Chasing the White List

36 The World Has Changed

37 The Powerbroker

38 The Butler

39 A Vote of No Confidence

40 A Time Bomb

41 The Swiss James Bond

42 The People’s Pope

43 Back from the Dead

Photographs

Acknowledgments

About Gerald Posner

Bibliography

Notes

Index

Illustration Credits

To Trisha, my muse and eternal love

Preface

In 1984, I traveled to Buenos Aires as part of my research for a biography of Auschwitz’s Angel of Death, Nazi Dr. Josef Mengele. I petitioned Argentina’s first democratically elected president, Raúl Alfonsin, for access to the country’s secret files on Mengele. There was no response for several weeks. Then, one night, at nearly 11:00 p.m., several uniformed police knocked on the door of my downtown hotel. I was put into the back seat of a blue Falcon, the very type of unmarked car that had become notorious under the military junta for taking away thousands of dissidents, many of whom were killed. But my trip ended at the main headquarters of the Federal Police. A grim-looking colonel informed me that he had been ordered to produce some documents. The folder I soon reviewed in an adjacent room contained a treasure trove of information about Josef Mengele and his decade as a fugitive in Argentina, everything from the original International Red Cross passport under an alias on which he had arrived from Europe to details of how he stayed one step ahead of Nazi hunters. A few of those papers raised broader questions about whether Nazi war criminals had reached safe haven in South America after World War II with the assistance of a few ranking Catholic prelates in Rome.

A few weeks later, I was in Asunción. There, I toured the country with Colonel Alejandro von Eckstein, a military officer who was not only a good friend of the country’s dictator, Alfredo Stroessner, but who had personally cosponsored Mengele’s application for Paraguayan citizenship. With von Eckstein in tow, I reviewed a small part of that country’s sealed Mengele file. And I met a contingent of diehard neo-Nazis in Nueva Bavaria (New Bavaria), in the south of the country. Mengele had found safe haven there in 1960. Feeling safe to talk openly because of von Eckstein’s introduction, they regaled me with stories about how a local hotel in the rain forest had served decades earlier as a clearinghouse for some of the most notorious Nazis. And mixed in those stories were references once again to clerics in Rome to whom those South American National Socialists were grateful.

After that book, Mengele, was published in 1986, I moved on to other subjects. But the story about the church and its possible ties to the Third Reich had captured my attention and I tried staying abreast of it. In 1989, The New York Times published my long letter, Why the Vatican Kept Silent on Nazi Atrocities; The Failure to Act. That was a response to an editorial by conservative commentator Patrick Buchanan absolving the church of any moral responsibility for the Holocaust. Two years later the Times published my op-ed, The Bormann File, in which I castigated Argentina for not releasing a secret dossier about Hitler’s deputy that I had seen when I was inside the country’s Federal Police headquarters.

The last paragraph of my 1989 Times letter explained that I approached the question of any role the church might have played during World War II both as a reporter and a Catholic: Although my father was Jewish, my mother was Catholic, and I was educated by Jesuits. I consider myself as much a Catholic as Mr. Buchanan. But I am embarrassed by his need to defend the church on every historical issue. The church has been involved in terrible undertakings, and they cannot be denied. That many individual nuns and priests exhibited great bravery during World War II to save many victims does not diminish the silence or acts of the church’s hierarchy.

My focus, I would discover in the coming years, was far too narrow. I had thought the story was about a volatile mixture: institutional anti-Semitism and a fear of communism exacerbated by church leaders who failed to act forcefully when confronted with one of history’s greatest horrors in the Holocaust. What I discovered instead was that what happened within the church during World War II was part of a much more complex saga. The truth could be found only by following the trail of money.

As Elliot Welles, an Auschwitz survivor and a Nazi hunter for the Anti-Defamation League, told me, Profits. They matter as much in the church as they do inside IBM. Don’t forget it.

Even in 2005, when I started this book in earnest, I still underestimated its scope. Then I envisioned reporting only the story of the scandal-ridden Vatican Bank, founded in the middle of World War II. It has operated for seventy years as a hybrid between a central bank of a sovereign government and an aggressive investment banking house. While the Vatican Bank is at the center of this modern chronicle, it is impossible to fully understand the finances of the Vatican without going back in church history.

This story is a classic investigative tale about the political intrigue and secretive inner workings of the world’s largest religion. It is not about faith, belief in God, or questions about the existence of a higher power. Instead, God’s Bankers is about how money, and accumulating and fighting over it, has been a dominant theme in the history of the Catholic Church and often in shaping its divine mission. You can’t run the church on Hail Marys, said one bishop who ran the Vatican Bank.

God’s Bankers lays bare how over centuries the church went from surviving on donations from the faithful and taxes levied in its vast earthly kingdom to a Lilliputian country that hesitatingly embraced capitalism and modern finance. During the 1800s, Catholics were barred from even making loans that charged interest. A century later the Vatican Bank orchestrated complex schemes involving dozens of offshore shell companies as well as businessmen who often ended up in jail or dead. How and why that remarkable transformation took place is in part the tale of God’s Bankers.

The challenge in this project was to follow the money from the Borgias to Pope Francis, all the while prying into an institution that guards its secrets and keeps massive documentation sealed in its self-described Secret Archives. Compounding the problem, as one author wrote in 1996, Vatican officials would sooner talk about sex than money. The story that Rome preferred I not tell had to be pieced together from documents scattered in private and public archives, information gleaned from litigation files and court records, and dozens of interviews. A handful of clerics and lay officials in Rome—who, fearing retribution, spoke only on the condition of anonymity—provided an unprecedented insight into the cutthroat infighting that has often crippled the modern Papacy. Those interviews laid out the considerable challenge confronting Pope Francis when it comes to reforming the finances of the Vatican.

As I assembled my reporting, I realized a crucial part of the mix was missing: the inexorable quest for power that is tied to the pursuit of money. In the Vatican, it is a volatile brew. There are nearly a thousand men, most celibate, who live and work together, and wield not only great earthly power but who believe for the most part that they have inherited divine rights in safeguarding the one and true church. In the end, they are human, hobbled by the same frailties and shortcomings common to the rest of us. Little wonder that despite their best intentions they have often ended up in internecine wars and stunning scandals that rival those of any secular government.

A public mythology in books, articles, and movies has grown around the church and its money. Freemasons, the Illuminati, mobsters protected by priests, murdered Popes, hoards of Nazi gold in the Vatican’s basement—the wildest theories might be entertaining but they poorly serve history. God’s Bankers cuts through the masses of misinformation to present an unvarnished account of the quest for money and power in the Roman Catholic Church. No embellishment is needed. That real tale is shocking enough.

1

Murder in London

London, June 18, 1982, 7:30 a.m. Anthony Huntley, a young postal clerk at the Daily Express, was walking to work along the footpath under Blackfriars Bridge. His daily commute had become so routine that he paid little attention to the bridge’s distinctive pale blue and white wrought iron arches. But a yellowish orange rope tied to a pipe at the far end of the north arch caught his attention. Curious, he leaned over the parapet and froze. A body hung from the rope, a thick knot tied around its neck. The dead man’s eyes were partially open. The river lapped at his feet. Huntley rubbed his eyes in disbelief and then walked to a nearby terrace with an unobstructed view over the Thames: he wanted to confirm what he had seen. The shock of his grisly discovery sank in.¹ By the time Huntley made his way to his newspaper office, he was pale and felt ill. He was so distressed that a colleague had to make the emergency call to Scotland Yard.²

In thirty minutes the Thames River Police anchored one of their boats beneath Blackfriars’ Number One arch. There they got a close-up of the dead man. He appeared to be about sixty, average height, slightly overweight, and his receding hair was dyed jet black. His expensive gray suit was lumpy and distorted. After cutting him down, they laid the body on the boat deck. It was then they discovered the reason his suit was so misshapen. He had stones stuffed in his trouser pockets, and half a brick inside his jacket and another half crammed in his pants.³ The River Police thought it a likely suicide. They took no crime scene photos before moving the body to nearby Waterloo Pier, where murder squad detectives were waiting.⁴

There the first pictures were taken of the corpse and clothing. The stones and brick weighed nearly twelve pounds. The name in his Italian passport was Gian Roberto Calvini.⁵ He had $13,700 in British, Swiss, and Italian currency. The $15,000 gold Patek Philippe on his wrist had stopped at 1:52 a.m. and a pocket watch was frozen at 5:49 a.m. Sandwiched between the rocks in his pockets were two wallets, a ring, cuff links, some papers, four eyeglasses, three eyeglass cases, a few photographs, and a pencil.⁶ Among the papers was an address book page with the contact details for a former official at the Banca Nazionale del Lavoro; Italy’s Socialist Finance Minister; a prominent London solicitor; and Monsignor Hilary Franco, who held the honorary title of Prelate of the Pope.⁷ Police never found the rest of the book.

A city coroner arrived at 9:30, two hours after the body’s discovery, and took it to London’s Milton Court morgue.⁸ There they stripped the corpse, took his fingerprints, and prepared for an autopsy. Their notes reflect that the dead man oddly wore two pairs of underwear.⁹

London police quickly learned from the Italian embassy that the passport was a fake. And it took only a day to discover the false name was simply a variation of the dead man’s real one: he was sixty-two-year-old Italian banker Roberto Calvi, chairman and managing director of Milan’s Banco Ambrosiano, one of Italy’s largest private banks. He had been missing for a week. A judge there had issued a fugitive warrant because Calvi had jumped bail pending the appeal of a criminal fraud conviction the previous year.

A Roman magistrate and four Italian detectives flew to London to help British police cobble together a personal dossier.¹⁰ Calvi had risen from a middle-class family to become the chief of the Ambrosiano. He had turned a sleepy provincial bank into an aggressive international merchant bank. The magistrate informed his British counterpart that Calvi was no ordinary banker. He was involved with some of Italy’s greatest power brokers in a secret Masonic lodge and he was a confidant of the Vatican’s top moneymen.¹¹

Despite his criminal conviction, the Ambrosiano’s board had allowed him to remain at the helm of the bank. Although Calvi publicly promised to rescue his financial empire and restore its reputation, he knew that the Ambrosiano was near collapse under the weight of enormous debts and bad investments.¹² The bank’s board of directors had fired him only the day before his body swung from Blackfriars.¹³

The police began patching together how Calvi ended up in London. His odyssey had begun a week earlier when he had flown from Rome to Venice. From there he went by car to Trieste, where a fishing trawler took him on the short journey across the Gulf of Trieste to the tiny Yugoslavian fishing village of Muggia.¹⁴ The moment he left Italy’s territorial waters he became a fugitive. From Muggia, an Italian smuggler arranged for him to be driven overnight to Austria, where he shuttled between several cities for a few days before boarding a private charter in Innsbruck for a flight to London. He spent the last three days of his life in flat 881, a tiny room at the Chelsea Cloisters, a dreary guesthouse in the capital’s posh South Kensington district.¹⁵

The number of unanswered questions grew as the investigation continued. They were not even certain how Calvi got to Blackfriars. It was four and a half miles from his guesthouse. On a walk he would have passed half a dozen other bridges, any of which would have been just as suitable for a flashy suicide. Calvi was well known for his entourage of bodyguards. But British investigators found none. Nor could they locate a black briefcase supposedly crammed with sensitive documents.¹⁶ Calvi’s waistcoat was buttoned incorrectly, which friends and family told the police was out of character for the compulsive banker.¹⁷ He had shaved his trademark mustache the day before his death, but police interpreted that not as a sign of a suicidal man but evidence that he was altering his appearance to successfully stay on the run.¹⁸

Two men had been with Calvi in London. Silvano Vittor, a small-time smuggler, had flown with him on the charter. The other, Flavio Carboni, was a flashy Sardinian with diverse business interests and much rumored mob connections.¹⁹ They had fled London before detectives could interview them.

The police had also to cope with a flood of false sightings. Many thought they had seen Calvi in his final days, everywhere from the Tower of London to a sex parlor to a nightclub in the company of a cocaine trafficker.²⁰

Police soon confirmed that Calvi had a $3 million life insurance policy that named his family as the only beneficiaries.²¹ In his spartan hotel room investigators found a bottle of barbiturates, more than enough for a painless suicide. But toxicology reports revealed no trace of any drug. When police interviewed Calvi’s wife, Clara, she said that in one recent telephone call he told her, I don’t trust the people I’m with anymore.²² Anna, Calvi’s daughter, told the inspectors that she had spoken to her father three times the day before he died. He seemed agitated and urged her to leave her Zurich home and join her mother in Washington, D.C. Something really important is happening, and today and tomorrow all hell is going to break loose.²³

Another complication was that Calvi suffered from mild vertigo. The police calculated that he had to be acrobatic to reach his hanging spot. It required climbing over the parapet, descending a narrow twenty-five-foot ladder attached to the side of the bridge, rolling over a three-foot gap in construction scaffolding, and then tying one end of the rope around a pipe and the other around his throat, all the while balancing himself with twelve pounds of rocks and a brick crammed into his pockets, suit, and crotch. Not likely, thought the lead detective.²⁴ Moreover, the police matched the stones to a construction site some three hundred yards east of the Thames. Calvi would have had to pick up the rocks there and return to Blackfriars before putting them into his clothing. But lab tests found no residue on his hands. Also, since the ladder he would have descended was heavily rusted, police expected some trace on his hands, suit, or polished dress shoes. There was none.

The London coroner, Dr. David Paul, expressed no doubts that the cause of death was suicide. He relied on the opinion of Professor Keith Simpson, the dean of British medical examiners, who had performed the autopsy.²⁵ A month after Calvi’s body was found, an inquest was held in the Coroner’s Court. Paul presented the details of the police investigation and autopsy to a nine-person jury. Simpson testified that in his postmortem exam he found no signs of foul play and there was no evidence to suggest that the hanging was other than a self-suspension in the absence of marks of violence.²⁶ Thirty-seven others testified, mostly police officers.²⁷ Calvi’s brother, Lorenzo, surprised the inquest with a written statement that revealed that Roberto had tried killing himself a year earlier. Carboni and Vittor, the duo with Calvi in London, refused to return to England but submitted affidavits. When they last saw Calvi late on the night he died, he was relaxed. Nothing seemed out of the ordinary. Police would not discover for another decade that Carboni had left London with Calvi’s briefcase packed with important documents.²⁸

Paul admitted that it was difficult for Calvi to kill himself at Blackfriars. But it would have been just as tough for someone to murder him and leave no trace evidence or injuries on the body.²⁹ Paul took ten hours to set forth his case. He allowed only a twenty-minute lunch break. It was Friday evening and the jury seemed restless to go home. But the coroner insisted they start deliberations.

The six men and three women reported back in under an hour. They were having trouble reaching a verdict. Dr. Paul instructed them that their decision did not have to be unanimous. Seven of nine jurors would suffice for a verdict.³⁰ After another hour, at 10 p.m., they returned with a majority finding that Calvi had killed himself.³¹

The Calvi family instantly rejected the finding.³² Clara told an Italian newspaper that her husband was murdered and his death was connected to ferocious struggles for power in the Vatican.³³ Some questioned whether she was motivated by money in pushing a murder theory since Calvi’s life insurance was voided if he killed himself.³⁴ But the Calvis were not the only ones skeptical about the suicide ruling. Italian investigators who had assisted the British police believed there was foul play.³⁵ And businessmen and government officials who knew Calvi were startled by the finding. Why bother to go to London to do that, a senior bank director said. The British and Italian press were unanimous that the British inquest seemed a surprisingly incompetent rush to judgment.³⁶ That verdict would probably have been greeted with even greater derision had it then been public knowledge that only days before his death Calvi had written a personal letter—part confessional, part a plea for help—to Pope John Paul II.³⁷ In the letter, Calvi declared he had been a strategic front man for the Vatican in fighting Marxism from Eastern Europe to South America.³⁸ And he warned that upcoming events would provoke a catastrophe of unimaginable proportions in which the Church will suffer the gravest damage.³⁹ He pleaded for an immediate meeting with the Pontiff so that he could explain everything. He also claimed to have important documents for the Pope.⁴⁰

The catastrophe Calvi wrote about might have been the Ambrosiano’s collapse, which took place within weeks of his death.⁴¹ Early news reports said the bank had a debt of $1.8 billion, much of it guaranteed by the Istituto per le Opere di Religione (the Institute for Works of Religion, or more simply, the Vatican Bank).⁴² Investigators soon learned the Vatican Bank was the Ambrosiano’s largest shareholder. Did the Vatican itself play a role in the Ambrosiano’s failure? British tabloids quickly dubbed Calvi God’s Banker.⁴³ A veritable conspiracy industry in Who killed Calvi? sprang up, complete with TV documentaries, books, and even walking tours of Blackfriars Bridge.

Nine months after the coroner’s verdict, three Italian forensics experts conducted a second autopsy but could not resolve whether the death was suicide or murder.⁴⁴ The Calvis pushed for a new inquest.⁴⁵ A British appellate court ordered one almost a year to the date after the original hearing.⁴⁶

A different coroner, Dr. Arthur Gordon Davies, impaneled another jury of nine. This time there was no crammed single day of testimony and deliberations. Instead, the what’s-the-rush pacing translated into a nearly two-week hearing. When the jurors got the case they deliberated for three hours before settling unanimously on an open verdict, a British bureaucratic loophole that essentially means we don’t know. The original suicide finding was vacated. The case was reclassified unsolved and there was no official cause of death.⁴⁷

The Calvis then petitioned Italian prosecutors to get a new investigation of the death.⁴⁸ The family hired U.S.-based Kroll Security Group—a preeminent private investigative company—to conduct a fresh probe.⁴⁹ Kroll concluded that both British inquests were incomplete at best and potentially flawed at worst, as they had glossed over evidence that indicated Calvi might have been drugged and murdered.⁵⁰ The following year, the Calvis retained two former Scotland Yard forensic scientists to utilize a laser test not available in 1982 to reexamine the clothing. They discovered water staining on Calvi’s suit and unexplained marks on the back of his jacket. It was almost inconceivable, they concluded, that Calvi alone had climbed to the spot on the bridge’s scaffolding from which he was hanged.⁵¹

In 1998, sixteen years after his death, the Calvi family convinced a Roman judge to order the body exhumed. Pathologists at Milan’s respected Institute of Forensic Medicine conducted a thorough autopsy.⁵² They cited suspicious circumstantial evidence, including possible bruises on the banker’s wrist and foot. They also identified traces of another person’s DNA on Calvi’s underwear.⁵³ The team offered a complicated explanation of how water stains on the clothing—read against a table of the tides on the fateful night—suggested it was likely murder. But there still was not enough compelling evidence to move the case forward.

Meanwhile, Italian prosecutors had a problem. Too many people were either confessing to killing Calvi or trying to cut deals on their own criminal cases by asserting they knew who had done it. So many claimed to have the inside story that after a while an offer to solve the Calvi case became the quickest way for a plea-bargaining defendant to lose credibility.

In 2002, when movers were packing up the Institute of Forensic Medicine in preparation for a cross-town move, they stumbled across some mislaid evidence—Calvi’s tongue, part of his intestines and neck, and some fabric from his suit and shirt—in the back of a cupboard. Three Roman investigating magistrates ordered the evidence be turned over for yet another examination. Scientists applied the latest forensic techniques, some of which had not existed just a couple of years earlier. If Calvi had climbed into place over the bridge’s scaffolding, reenactments demonstrated that he would have had microscopic iron filings under his nails or on his shoes and socks. There were none. And markings on his upper vertebrae indicated two points of strangulation. Calvi was strangled before the cord was placed around his neck.⁵⁴

The Calvis cited those findings in demanding the criminal investigation move faster. But prosecutors were in no hurry, hoping to avoid any mistakes in a case already marked by many missteps. It took another three years before they had enough evidence to issue murder indictments against five people, including the former chief of the secret Masonic lodge of which Calvi was a member and also Flavio Carboni, who was with Calvi in London over the fateful days in 1982.⁵⁵

A high security courtroom in Rome’s Rebibbia Prison was built for the sensational televised trial, which got under way on October 6, 2005.⁵⁶ The murder case was circumstantial. And the motive was a convoluted one involving embezzlement and blackmail. Still, many legal observers expected a guilty verdict. The jury got the trial after twenty months but deliberated only a day and a half. Almost two years to the date of their arrest, the defendants received the verdict: not guilty on all charges.⁵⁷

It [the acquittal] has killed Calvi all over again, a stunned prosecutor told the press.⁵⁸ In 2010 and 2011 two Italian appellate courts upheld the acquittals.⁵⁹

•  •  •

What did Calvi know that was so important that someone killed him and disguised it as an elaborate public suicide? That cannot be answered without pointing a spotlight on the corridors of power and money inside the Vatican. The underlying tale is how for centuries the clerics in Rome, trusted with guarding the spiritual heritage of the Catholic faithful, have fought an internecine war over who controls the enormous profits and far-flung businesses of the world’s biggest religion. Only by examining the Catholic Church’s often contentious and uneasy history with money is it possible to expose the forces behind Calvi’s death. Ultimately, Calvi’s murder is a prequel to understanding the modern-day scandals from St. Peter’s and fully appreciating the challenges faced by Pope Francis in trying to reform an institution in which money has so often been at the center of its most notorious scandals.

2

The Last Pope King

Long before the church became a capitalist holding company in which men like Calvi flourished, the Vatican was a semifeudal secular empire.¹ For more than a thousand years popes were unchallenged monarchs as well as the supreme leaders of the Roman church. Their kingdom was the Papal States. During the Renaissance, Popes were feared rivals to Europe’s most powerful monarchies. And at its height in the eighteenth century the church controlled most of central Italy. Popes believed that God had put them on earth to reign above all other worldly rulers.²

The Popes of the Middle Ages had an entourage of hundreds of Italian clerics and dozens of lay deputies. In time, they became known as the Curia, referring to the court of a Roman emperor. They assisted the Pope in running the church’s spiritual and temporal kingdoms. Those outside the Vatican thought of the Curia simply as the bureaucracy that administered the Papal States. But that simplistic view minimized the Ladon-like network of intrigue and deceit composed largely of celibate single men who lived and worked together at the same time they competed with each other for influence with the Pope.³

The cost of running the church’s kingdom while maintaining the profligate lifestyle of one of Europe’s grandest courts pressured the Vatican always to look for ways to bring in more money.⁴ Taxes and fees levied on the Papal States paid most of the empire’s basic expenses. The sales of produce from its agriculturally rich northern land as well as rents collected from its properties throughout Europe brought in extra cash. But over time that was not enough to fuel the lavish lifestyles of the Pope and his top clerics. The church found the money it needed in the selling of so-called indulgences, a sixth-century invention whereby the faithful paid for a piece of paper that promised that God would forgo any earthly punishment for the buyer’s sins. The early church’s penances were often severe, including flogging, imprisonment, or even death. Although some indulgences were free, the best ones—promising the most redemption for the gravest sins—were expensive.⁵ The Vatican set prices according to the severity of the sin and they were initially available only to those who made a pilgrimage to Rome.⁶

Indulgences helped Urban II in the eleventh century offset the church’s enormous costs in subsidizing the first Crusades. He offered full absolution to anyone who volunteered to fight in God’s army and partial forgiveness for simply helping the Crusaders. Successive Popes became ever more creative in liberalizing the scope of indulgences and the ease with which devout Catholics could pay for them. By the early 1400s, Boniface IX—whose decadent spending kept the church under relentless financial pressure—extended indulgences to encompass sacraments, ordinations, and consecrations.⁷ A few decades later, Pope Paul II waived the need for sinners to make a pilgrimage to Rome. He authorized local bishops to collect the money and dispense the indulgences and also cleared them for sale at pilgrimage sites that had relics of saints.⁸ Sextus IV had an inspired idea: apply them to souls stuck in Purgatory. Any Catholic could pay so that souls trapped in Purgatory could get on a fast track to Heaven. The assurance that money alone could cut the afterlife in Purgatory was such a powerful inducement that many families sent their life savings to Rome. So much money flooded to Sextus that he was able to build the Sistine Chapel.⁹ Alexander VI—the Spanish Borgia whose Papacy was marked by nepotism and brutal infighting for power—created an indulgence for simply reciting the Rosary in public. The new sales pitch promised the faithful that a generous contribution multiplied the Rosary’s prayer power.¹⁰,I

Each Pontiff understood that tax revenues from the Papal States paid most of the day-to-day bills, while indulgences paid for everything else. The church overlooked the widespread corruption and graft inherent in collecting so much cash and instead grew ever more dependent on indulgences.¹² And as they got ever easier to buy and promised more forgiveness, they became wildly popular among ordinary Catholics.¹³

Indulgences were, however, more than a financial lifeline. They also helped medieval Roman Popes withstand challenges to their secular power. So-called antipopes—usually from other Italian cities—claimed they, rather than the pope elected in Rome, had the political or divine right to rule the Catholic Church.¹⁴,II Although some antipopes raised their own armies and had popular backing, they never mustered the moral authority to issue indulgences. Repeated efforts over centuries by pretenders to the Papacy to package and sell forgiveness for sins failed. Few Catholics believed that anyone but the Roman Pope had the direct connection with God to offer a real indulgence.¹⁶ And when the Pope’s armies were called upon to sometimes crush an antipope, it was usually the flood of cash from indulgences that paid for the war.

By the reign of Leo X—the last nonpriest elected Pope in 1513—a growing chorus of critics condemned indulgences as a shameless ecclesiastical dependence. Leo, a prince from Florence’s powerful Medici family, was a cardinal since he was thirteen. He was accustomed to an extravagant lifestyle by the time he became Pope at thirty-eight. Leo made the Papal Court the grandest in Europe, commissioning Raphael to decorate the majestic loggias. The Vatican’s servants nearly doubled to seven hundred. Assuming the role of a clerical aristocracy, cardinals were called Princes of the Church.¹⁷ Leo had no patience for critics who demanded he curb the sale of indulgences. He tried silencing his detractors by threatening excommunication.¹⁸ When that failed, he pressed ahead with a futures market by which diminution was available for sins not yet committed.¹⁹ So much cash flooded in that he could build St. Peter’s cathedral.²⁰

Pope-Kings unvaryingly were scions of a handful of powerful Italian families. When one of their sons became Pope, the by-products of a Papacy often included rampant corruption, pervasive nepotism, and unbridled debauchery.²¹ The cash from indulgences mostly became a bottomless pit.²²

The licentious lifestyle of the Papal Court and the widespread abuses in selling indulgences became a rallying cry for Martin Luther and the Reformation.²³ Pope Leo responded by excommunicating Luther.²⁴ One of the few benefits from the schism was that since Protestants condemned indulgences, the Holy See remained unopposed when it came to selling forgiveness to believers in Christ.

The steady flow of cash became ever more important as the Vatican suffered from the repercussions of the liberal political and social upheaval that swept Western Europe in the late eighteenth century, climaxing in the 1789 French Revolution. Monarchies friendly to the church were either toppled or greatly weakened. When Napoleon came to power in France in 1796 he demanded the Vatican pay millions a year in tribute to him. When the church could not afford to do so, he dispatched troops to Italy to strip many churches and cathedrals of anything of value and return the plunder to France. Worse, Rome’s real estate income in post-revolution France was extinguished as the nascent republic nationalized many church properties.²⁵ The new National Assembly banned French bishops from sending to Rome any of the money they raised. It was not much better in other countries. In Austria, cash-strapped Emperor Joseph II undercut Papal authority by diverting the Vatican-bound money to his own treasury. Revenue from Britain, Scandinavia, and Germany slowed.²⁶ Even Italy’s Prime Minister—personally approved for the office by Pope Pius VI—imposed a tax on church properties in a bid to stem the country’s financial crisis. Pius VI denounced the new tax as the work of the devil.²⁷

The fallout continued as political unrest in Europe spilled over into the first half of the nineteenth century: Papal income fell in a remarkable forty of the century’s first fifty years.²⁸ A few lay advisors worried that the social instability that wreaked havoc with church finances would not pass quickly. They recommended exploring ways by which the church might become less dependent on donations from the faithful. But such suggestions were invariably dismissed. Most ranking clerics believed that modern economic theory was a pernicious and reprehensible component of the liberal secular movement that had infected Europe. The Vatican had consigned to the inviolable Index of Prohibited Books John Stuart Mill’s seminal Principles of Political Economy.²⁹ Pope Benedict XIV, in a much heralded encyclical,Vix Pervenit (On Usury and Other Dishonest Profit), reiterated the long-standing church ban on loaning money with interest. By condemning interest-bearing loans as illicit, evil, and a sin, Benedict ended any internal debate.³⁰

The Vatican’s antiquated view about money meant that it did nothing to encourage fiscal growth or industrial development in the Papal States. The economy stagnated, and over decades tax revenues steadily declined.³¹

By the time Gregory XVI, the son of a lawyer, became Pope in 1831, the situation was so dire that he felt compelled to do something remarkable: he borrowed money from the Rothschilds, Europe’s preeminent Jewish banking dynasty.³² The £400,000 loan ($43,000,000 in 2014) was a lifeline to the church.³³ The Rothschilds had a solid reputation when it came to bailing out distressed governments. They had steadied Austria’s finances after the Napoleonic Wars and provided enough money to squash two rebellions in Sicily.³⁴

James de Rothschild, head of the family’s Paris-based headquarters, became the official Papal banker.³⁵ One of his brothers, Carl, who ran the family’s Naples branch, began traveling to Rome to consult with the Pope. Their financial empire prompted a mixture of envy and resentment among church officials. Most traditionalists, who referred to James as the leader of international Jewry, were appalled that the church had resorted to Christ-killers for financial succor.³⁶ French Poet Alfred de Vigny wrote that a Jew now reigns over the Pope and Christianity. He pays monarchs and buys nations.³⁷ German political writer Karl Ludwig Börne—born Loeb Baruch but changed his name upon becoming a Lutheran—thought that Gregory had demeaned the Vatican by giving Carl Rothschild an audience. Börne noted that a wealthy Jew kisses his [the Pope’s] hand whereas a poor Christian kisses the Pope’s feet. He fanned the distrust among many of the faithful: The Rothschilds are assuredly nobler than their ancestor Judas Iscariot. He sold Christ for 30 small pieces of silver; the Rothschilds would buy Him, if He were for sale.³⁸

It had been only thirty-five years since the destabilizing aftershocks from the French Revolution had led to the easing of harsh, discriminatory laws against Jews in Western Europe. It was then that Mayer Amschel, the Rothschild family patriarch, had walked out of the Frankfurt ghetto with his five sons and established a fledgling bank. Little wonder the Rothschilds sparked such envy. By the time Pope Gregory asked for a loan they had created the world’s biggest bank, ten times larger than their closest rival.³⁹

Church leaders may not have liked the Rothschilds but they did like their cash. Shortly after the first loan, the Pope bestowed on Carl the medal of the Sacred Military Constantinian Order of St. George. For their part, the Rothschilds thought the Vatican was the most disorganized and chaotic mess they had ever encountered. They were startled to discover the church had no budgets or balance sheets. The prelates who controlled the money had no financial training. There were no independent reviews or audits. The combination of secrecy and disorder was ripe for abuse. When the Papal States fell into debt, the Pope sometimes simply repudiated the obligation and refused to pay. It was little wonder that the number of countries or banks willing to loan to the church had shrunk. Still, the Vatican rebuffed all financial reforms the Rothschilds suggested. Pope Gregory was suspicious of modernity, thought democracy was dangerous and destabilizing, and condemned even railroads as the work of the devil.⁴⁰

Gregory died in 1846. His successor was Pius IX. Pius, the fourth son of a count, confronted a new problem: a surging tide of Italian nationalism that threatened the church’s control of the Papal States.⁴¹ Since the eighth century, the Papal States had been the earthly symbol of the church’s power. By the time Pius became Pope, the Vatican’s land spread east from Rome in a broad swath that split Italy in half. It was sandwiched between two colonial powers, the Hapsburgs to the north and the French to the south. Pius was barely on the Papal throne when popular uprisings erupted across Italy. A loosely knit federation of anticlerical anarchists and intellectuals hoped to expel the colonial powers and establish a unified Italian republic with Rome as its capital. In their vision there was no room for the Papal States. Pius viewed the nationalists with alarm and disdain.⁴²

Determined not to lose the church’s empire and all its income, Pius tried dampening the widespread nationalist fervor with a conciliatory step: he introduced some reforms in the Papal States.⁴³ His decrees established the first ever city and state councils and lifted some restrictions on speech. He freed more than a thousand political prisoners and created a Consultative Assembly composed of twenty-four elected lay representatives.⁴⁴ The standing gallows in the center of each city were demolished, and the Pope loosened the censorship on newspapers. The changes were popular. But they were a decade too late.

Sicily exploded in full rebellion in January 1848. There was a revolt in Palermo that same month.⁴⁵ Pius scrambled to stay ahead of the deteriorating situation by making more concessions. He set forth the outlines for a constitution that alluded vaguely to limiting his own secular power.⁴⁶ But the compromises from Rome got lost in the escalating violence. The nationalists drove the Austrians from Milan that spring. Fearing the Austrians might try to seize some of the church’s lands in retaliation, Pius dispatched ten thousand troops. Word spread fast that the church’s army was on the march. Ordinary Italians were enthusiastic. But almost as quickly as Pius had sent them, he reversed himself, declaring that he did not think the church should be at war with a devoutly Catholic nation such as Austria.⁴⁷

Popular sentiment boiled when Pius wavered. Romans, in particular, were furious and condemned the Pope as a reactionary posing as a reformer. Large crowds protested daily outside St. Peter’s and breakaway gangs clashed frequently with the Vatican’s Swiss Guards. On November 15, 1848, a mob surged into the Palace of the Chancellery and chased down Count Pellegrino Rossi, the Papal Prime Minister. They cornered him on a staircase and slit his throat.⁴⁸ The next day an armed gang swarmed near the Palazzo del Quirinale and killed several Swiss Guards as well as the Pope’s personal secretary.⁴⁹ Some in the mob insisted the Pope be taken prisoner. A few days later, disguised as a common priest—and with his face partially concealed by a large scarf and dark glasses—Pius fled Rome in a carriage for the remote sea fortress at Gaeta in southern Italy. The king of Naples guaranteed his safety.

France’s Louis Napoleon (later Napoleon III) commissioned an expeditionary force of nine thousand troops and sent them to battle the Italian nationalists so Pius could return to Rome. The fighting was bitter and it took eight months before the French retook Rome and toppled the fledgling Republic. French army officers and three senior cardinals (the so-called Red Triumvirate) ran the city while the Pope was in exile. The French would not allow Pius to return until they were confident all the nationalist cells were eliminated.⁵⁰

Pius returned to the Vatican nine months later. He was now the reactionary that people mistakenly thought he was before the fighting had forced him to flee for his life. The Pope would never again consider any reforms nor would there be any more compromises. The disarray he witnessed upon his return to Rome further convinced him that modern thought caused disorder. Crime was rampant. Price gouging over food exacerbated widespread hunger. Jews, a favorite scapegoat, received most of the blame, especially since some had worked with the nationalists.⁵¹ Pius even made Rome’s Jews pay the cost of his return since he contended they must have somehow been the agitators responsible for his exile in the first place.⁵²

Worries about the chaos in Rome were soon replaced by concerns over the dire condition of the church’s finances. The bedlam meant sales of indulgences had plummeted. Collection of taxes in the Papal States had been badly affected. There was an enormous pile of two years of unpaid bills as well as new obligations to pay for the French garrison that now protected Rome. The Vatican desperately needed an infusion of cash. The Catholic bank to which Pius hoped to go for help, Paris-based Delahante and Company, had collapsed from the fallout of the Third French Revolution.⁵³ Although the aristocratic Pius was an unrepentant advocate of a medieval view of Jews as the evil architects of everything from rationalism to Freemasonry to socialism, he reluctantly agreed that only the Rothschilds could again keep the Church afloat.⁵⁴

The new Rothschild loan was 50 million francs—more than $10,000,000. That was more than the Vatican’s entire budget for a year. Two additional loans were soon forthcoming, totaling another 54 million francs.⁵⁵,III

The Rothschilds, meanwhile, were criticized by some Jewish leaders who felt as though the family simply profited from the church without making any effort to change its harsh policies toward Jews. So the Rothschilds tried leveraging their influence to beseech the Holy See to improve conditions for the fifteen thousand Jews in the Papal States.⁵⁷ They asked that the Pope cancel extra taxes levied solely on Jews, the prohibition on taking property from the ghetto, and the ban on working in professions, and that he abolish onerous evidentiary standards that put them at tremendous disadvantage in court cases. Pius sent a written assurance to the Rothschilds through the Papal Nuncio in Paris that he would help.⁵⁸ Privately, he told some of his aides that he preferred martyrdom to acceding to the Rothschild requests.⁵⁹ Pius ultimately made only a single concession: he tore down the walls and chained gates that ringed Rome’s notorious Jewish ghetto, the last in Europe set apart by a physical boundary.⁶⁰ But it had no practical effect, as Jews were prohibited from moving anywhere else.⁶¹ When Carl Rothschild visited Rome four months later and complained that little had changed, Pius mollified the family by lifting a long-standing requirement that Jews attend proselytizing sermons every week on their Sabbath.

Pius bristled at the church’s dependency on the Rothschilds. So did prominent Catholic bankers, like the Belgian André Langrand-Dumonceau, who declared it shameful to borrow money from Jews.⁶² Church leaders believed Jewish financiers were Freemasons, part of a larger international effort to destabilize the Vatican and push a secular philosophy in which worship of money replaced that of God.⁶³ To make the church less reliant, Pius appointed a deacon, Giacomo Antonelli, as his Cardinal Secretary of State (roughly the Pope’s Prime Minister) as well as chief of the Papal Treasury.IV Antonelli, who came from a prosperous Napolitano family, had been one of Pius’s few trusted aides in exile.⁶⁵ It was a controversial selection. According to Antonelli’s biographer, Frank Coppa, In pride he was considered a match for Lucifer, in politics a disciple of Machiavelli.⁶⁶ But he had the backing of Pius, the only person who mattered. The Pope gave him broad leeway to make the church self-sufficient.⁶⁷

Antonelli began by ending the Vatican’s financial subsidies for clerical orders such as the Jesuits and Franciscans. They had historically been a costly drain.⁶⁸ Although it caused a furor among the religious orders that relied on getting money from Rome, Pius refused any entreaty to reverse the decision. And as part of an ambitious restructuring of the church’s debt—and against the advice of a majority in the Curia—Antonelli raised taxes and introduced new tariffs in the Papal States. He negotiated with the Rothschilds to consolidate some of the Vatican’s outstanding debts into a single forty-year loan.⁶⁹ It was for a then staggering 142,525,000 francs (around $30,000,000, some 40 percent of the church’s outstanding debt) at a 5 percent interest rate.⁷⁰ Antonelli proved as tough a negotiator as James Rothschild. He resisted the bankers’ demands that the Vatican’s extensive real estate serve as collateral. In 1859, with the new loan in place, Antonelli balanced the Papal budget for the first time since the start of the century.⁷¹

Antonelli soon devised a plan to entirely bypass the Rothschilds: the church would sell interest-bearing debt directly to the faithful without using an investment bank. Two Catholic newspapers offered the chance to test his do-it-alone proposal. In 1861, the Vatican brought the Jesuits’ fortnightly La Civiltà Cattolica (Catholic Civilization) to Rome. And it purchased L’Osservatore Romano (The Roman Observer), a paper that became required reading in far-flung Catholic communities.⁷² Besides generic articles about faith, Antonelli crammed both papers with appeals for donations. The cash that came in was double his target.⁷³ The Pope approved the sale of future debt without the Rothschilds.

In 1860, the church issued 60 million lire in Vatican bonds. Priests urged the faithful to buy them as their religious duty. Bishops collected the money and sent it to Rome.⁷⁴ And when the church eventually needed help managing its debt, Antonelli and Pius ushered in two Paris-based Catholic bankers, the Marquis de la Bouillerie and Edward Blount.⁷⁵ Free of the Rothschilds, it was not long before Pius rebuilt some of the wall around Rome’s Jewish ghetto.⁷⁶

Catholics gave money to the church despite Pius’s unpopularity. Italians longed for a unified Italy. They knew the Papal States were an obstacle to achieving that. The Pope’s likability quotient had also suffered after a widely publicized incident in 1858 in which the Papal police in Bologna forcibly seized a six-year-old boy, Edgardo Mortara, from his Jewish parents after a Catholic housekeeper told friends she had secretly baptized the child years earlier when he had been gravely ill as an infant.⁷⁷ Once children were baptized the church considered them to be Catholic and therefore Jewish parents could not be trusted to raise them. For centuries, children allegedly baptized in the Papal States had been taken from their birth parents and raised either by a Catholic family or placed into a church-run institution dedicated to the conversion of Jews.⁷⁸

What made the Mortara case different was that the youngster’s confinement to a Rome conversion center had sparked appeals to Pius personally to intervene and order the boy returned to his parents. Pius instead directed the boy be brought regularly to the Vatican’s Esquiline Palace, where he promised to personally raise him as a Catholic.⁷⁹

The boy was, of course, awed by the splendor of the Papal Court, and Pius steadfastly ignored many appeals for his release. Napoleon III, who found it galling that the French garrison made it possible for the youngster to be held, condemned the kidnapping, as did his devout and popular wife, Empress Eugénie. The Prime Minister of the Italian state of Piedmont—seeing this as an opportunity to weaken the Papacy—promised to return the boy to his parents.⁸⁰ And Catholics in America and Britain denounced the boy’s taking. Pius dismissed the outcry as a conspiracy of freethinkers, the disciples of Rousseau and Malthus.⁸¹ Later, in a reference often used about Jews, Pius chided his critics as dogs and complained there were too many in Rome.⁸²

When a delegation of Roman Jews visited Pius and pleaded for the boy’s release, the Pope erupted in anger, accusing them of stirring up popular sentiment against the Papacy. Personal appeals from the Rothschilds went unanswered. La Civiltà Cattolica fed the widely held belief that Jews murdered Christian children in order to use their blood in rituals. It reported Eastern European Jews had kidnapped and crucified children and suggested that the child’s parents wanted him back only so they could torture him since he was now a Catholic.⁸³ The paper also published a story about Edgardo’s early months in Rome, claiming that he begged to be raised in a Christian home, and that, supposedly, without any coaxing, he said, I am baptized and my father is the Pope.⁸⁴

Antonelli knew the impassioned controversy was bad for business. Contributions from the faithful had plummeted due to the international outrage. Antonelli asked the Pope to reconsider. But Pius would not budge. I have the blessed Virgin on my side, he told his Secretary of State.⁸⁵ And as for those who might not want to give money to the church because they were alienated by the taking of the boy, Pius told Antonelli that was his job to fix it.⁸⁶,V

The Pope had picked a bad time to test the limits of his secular power. Although the French had returned Pius to Rome, the nationalists had not abandoned their quest to unite Italy. A new wave of bloody insurrections kicked off across the peninsula in 1859. The resurgent instability caused distress inside St. Peter’s. Napoleon’s armies joined Sardinian militias in fighting Austrian troops and soon all of Italy was engulfed in civil war. The Hapsburgs eventually lost Lombardy. And the Bourbons relinquished control of Naples. Venice and Sardinia fell into the nascent unified Italian Republic. In 1861, the nationalist army annexed most of the Papal States. The Pope was now the secular king only of Rome.

Antonelli beseeched Pius to liberalize the Vatican’s investments. Having lost the Papal States’ income, the church would either have to downsize the Pope’s court and Curia or find creative ways to bring in more cash. Approving Vatican bonds as he had the previous year was only the first step, Antonelli told the Pope. Antonelli confided to a colleague that he thought Pius would give him more leeway over the finances so long as the Pope did not consult the Holy Spirit.⁸⁸

Pius gave his answer later that year in an encyclical, Quanta Cura (Condemning Current Errors) and an attached Syllabus of Errors. The Syllabus caused an uproar.⁸⁹ It, relied on edicts of previous Popes to denounce eighty tenets of modern life, including freedom of speech, divorce, the right to rebel against a lawful government, and the choice of people to practice religions other than Catholicism. Syllabus deplored materialism, science, liberalism, and democracy. Its eightieth statement declared there was no reason any Roman Pope should ever have to harmonize himself with progress . . . [or] recent civilization.⁹⁰

Syllabus was an unrelenting broadside condemning the modern world and held stubbornly to the notion that the church could thrive according to the standards of a bygone century.⁹¹ Its harsh tone was particularly startling since Pius understood the church’s history better than many of his predecessors. Some had hoped that Pius might revert to the reformer traits that marked his early Papacy. But Syllabus crushed such expectations. Antonelli knew that Western governments were dumbstruck by the denunciations of freedom of thought and of conscience.⁹² In private, he tried explaining away Pius’s anti-intellectual diatribe.⁹³ But much in the same way that the kidnappings of the Jewish children had undermined the Pope’s moral standing, Syllabus undercut his intellectual integrity. Italian university students burned copies in protest. A few priests left their orders citing Syllabus. Secular newspapers trashed it.

As with the kidnappings, Pius dismissed all criticism. He boasted that Syllabus was a seminal pronouncement and the attacks only reinforced his view that he alone had been divinely selected to guide the church. Eventually, to settle any simmering internal dissent, he ordered all bishops and cardinals to Rome in 1869 to debate the church’s role in opposing rationalism. Seven hundred ninety-two made the journey.⁹⁴ The First Vatican Council—held in the acoustically dreadful St. Peter’s—focused instead on whether a Pope’s authority had limits. After seven months of raucous debate a majority of the bishops voted in favor of a declaration that on all issues of faith the Pope could unilaterally invoke infallibility.⁹⁵

But there was little time inside Pius’s inner circle to celebrate. The day after the infallibility vote France declared war on Prussia.⁹⁶ The war was the ideal pretext for Napoleon to withdraw his garrison and leave Rome undefended.⁹⁷ Pius pleaded in vain to other Catholic countries for help. None did. Appalled by the two kidnappings and convinced that the Pope was an obstructionist, no leaders had any incentive to risk the lives of their troops to save a Pontiff who was so incredibly at odds with modern society.

The Vatican was defended now by Zuavi Pontifici—Papal light infantry—several thousand young, unmarried Catholic volunteers from more than two dozen countries. Few thought the ragtag force could withstand a sustained assault. The Italian king sent an emissary who offered to spare the church a humiliating military defeat by pretending the nationalist army took control of Rome under the guise of protecting the Pontiff. The nationalists even offered to recognize Papal sovereignty, the right of the Vatican to have ambassadors, and to pay some money to offset the income the church had lost from the Papal States. Pius would hear none of it. Instead, he let loose with a vicious verbal assault. The King’s envoy was so shaken that in his rush to get away from Pius he almost walked out a third-story window instead of a door.⁹⁸

Rebuffed by the Pope, Italian troops massed outside Rome. Pius could not be dissuaded of his delusion that no Italian army would dare attack Rome—a sacred city—so long as he was there.⁹⁹ When nationalist troops breached the city’s outer perimeter, the Pope urged his garrison to resist the vipers.¹⁰⁰ Rome fell in a day. The Pope ordered the white flag raised over St. Peter’s at 9:00 a.m. on September 20. For the first time in a millennium, the church had no sovereign seat of power. Its sixteen thousand square miles of feudal empire had been reduced to a tiny parcel of land.

To soften the blow, the new republic offered the Pope the Leonine City, a large Roman district around which the ninth-century Pope Leo IV commissioned the Leonine Wall. But Pius worried that if he agreed to anything it would imply he endorsed the legitimacy of Italy’s rule over his former kingdom.

Some cardinals and the Father Superior of the Jesuits advised that he flee and establish a Papacy in exile. Antonelli advised against abandoning Rome.¹⁰¹ Pius needed little persuasion. He quickly refused. His exile in Gaeta had been too unsettling. He felt too old at seventy-eight to leave Italy. And he had a different plan. Although Italian officials assured him he was free to come and go as he wanted, Pius declared himself the prisoner of the Vatican—a victim Pope—and remained shuttered inside St. Peter’s.¹⁰² He excommunicated those who had played key roles in the conquest of Rome. And when the new government wanted to move into the Quirinale—built in the sixteenth century as a Papal summer palace—Pius petulantly refused to hand over the keys.¹⁰³

Pius and his advisors had every reason to resort to high theatrics: Italy’s unification was disastrous for the church. And to their great frustration, there was little they could do about it. As Antonelli feared, the seizure was more than just a blow to the Vatican’s prestige. The Papal States had included the Vatican’s wealthiest regions and almost all its population.¹⁰⁴ Antonelli knew the loss meant the church was teetering on the verge of bankruptcy, some 20 million lire in debt.¹⁰⁵ The situation would have been worse had Antonelli not secretly met with an Italian aristocrat, Baron Alberto Blanc, and through his efforts got Italy to return 5 million lire belonging to the Holy See, all in bank accounts seized by the secular government.¹⁰⁶

Pius seemed oblivious to the bad news.VI He wanted money for a new militia of mercenaries to counter the nonexistent threat that Italian armies might appropriate the Vatican itself.¹⁰⁸ He also thought it important to preserve the spectacle of the sumptuous Papal monarchy. Pius refused to dismiss any workers. And he insisted on paying salaries and pensions for officials who had been fired by the new Italian government, as well as for those who resigned out of loyalty to the Vatican. In less than a year, 15 percent of the church’s budget went to salaries of ex-employees of the Papal States.¹⁰⁹

Antonelli knew it would take too long to raise money with another debt issue. After much debate, Pius and his advisors settled on an unexpected solution: to rekindle Peter’s Pence. It was a fundraising practice that had been popular a thousand years earlier with the Saxons in England (before Henry VIII had banned it). Obolo di San Pietro in Italian, offerings from the faithful, Peter’s Pence consisted not only of donations, but also of fees paid by loyal Catholics for services such as weddings, funerals, and confirmations.¹¹⁰ Special taxes levied during the Crusades were tallied as part of Peter’s Pence.¹¹¹

In better times, the Vatican set aside money raised from Peter’s Pence only for extraordinary costs.¹¹² Now it was needed to pay day-to-day operating